Cherokee Nation of Oklahoma v. Leavitt – Oral Argument – November 09, 2004

Media for Cherokee Nation of Oklahoma v. Leavitt

Audio Transcription for Opinion Announcement – March 01, 2005 in Cherokee Nation of Oklahoma v. Leavitt

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John Paul Stevens:

We will now hear argument in the Cherokee Nation against Thompson and Thompson against the Cherokee Nation.

Mr. Miller.

Lloyd B. Miller:

Justice Stevens, and may it please the Court:

These two contract cases concern whether the Government is liable in money damages under the Contract Disputes Act and section 110 of the Indian Self-Determination Act when the Secretary fails to fully pay a contract price for the–

Sandra Day O’Connor:

Would you mind explaining to us how these two cases relate?

The Court of Appeals for the Federal Circuit decision went one way and the Tenth Circuit went another.

And are the claims at all overlapping?

How are they differentiated?

Lloyd B. Miller:

–No, Justice O’Connor.

They’re… they’re not overlapping.

The claims in the Federal Circuit case involved three contracts covering fiscal years 1994, 1995, and 1996.

And the Cherokee contract at issue in the case that went through the Tenth Circuit is fiscal year 1997 contract and funding agreement.

The section… remedial section of the act, section 110–

Sandra Day O’Connor:

But they’re certainly at odds on the legal theory.

Lloyd B. Miller:

–Yes, they are, Your Honor.

The Federal Circuit applied standard, bedrock Government contracting law, primarily the rule that when a contract payment is conditioned on there being an appropriation, the payment right vests in full once the appropriation is enacted by Congress.

And secondly, the court ruled that the Indian Self-Determination Act does not bar the payment of the contracts in this case under the circumstances presented.

And to the contrary.

We submit that the Secretary’s construction of that clause would undo the act, would undo section 106(b) of the act–

Sandra Day O’Connor:

Are the circumstances any different in the two situations, the Cherokee Nation case and the one in the Federal Circuit?

Are… are the circumstances, giving rise to the claim, different in any respect that could account for a difference in outcome?

Lloyd B. Miller:

–No, Justice O’Connor.

There… there is no difference in that respect, and there is an overlap in… in this sense.

The Shoshone-Paiute contract that arose through the Tenth Circuit case did involve fiscal year 1996, the same fiscal year as the Cherokee contract that covered fiscal year 1996.

So in that sense, both cases involved the… the same relevant issues.

The… the key, we think, to the resolution of the act is found in the act on page 12a of the appendix to our opening blue brief.

The act was amended in this section twice, in 1988 and in 1994, for three reasons: to secure contract funding, to reduce the Federal bureaucracy, and to eliminate secretarial funding discretion over contract funding issues.

In section 12a, 450j-1(a), the bottom half of the page, it is stated in subparagraph (1) that the amount of funds provided under the terms of self-determination contracts entered into pursuant to this subchapter shall not be less than the appropriate Secretary would have otherwise provided.

And then directly pertinent to this case is subparagraph (2), which directs… which addresses contract support costs.

There shall be added to the amount required by paragraph (1) contract support costs which shall consist of certain items.

Lloyd B. Miller:

Incidentally, these items typically cover the cost of insurance, audit costs, procurement costs that might otherwise be administered for the Government by the Office of Personnel Management or personnel costs that might otherwise be administered by the Office of Personnel Management.

David H. Souter:

Does the… do the actual contracts reduce the… the CSC’s to a dollar amount or–

Lloyd B. Miller:

Yes, they do.

David H. Souter:

–So… so we know… they… they knew at the moment the contract was signed what it was going to cost.

Lloyd B. Miller:

That is correct, Justice Souter.

In the case of the Shoshone-Paiute contract, when the parties decided to renegotiate the contract amount, they entered into an amendment to specify the new, updated contract amount.

Anthony M. Kennedy:

I don’t want to get ahead of you in taking us through the statute, so you can defer the question if… if you choose.

But it seems to me relevant to (a).

Does… is… is part of the submission that the Government used some of the funds that otherwise would have gone to you for its own monitoring and… of… of health contracts and that that’s what’s in dispute?

Or was it just general overhead for other programs it used?

Lloyd B. Miller:

It… it is precisely, Justice Kennedy, what… what you stated.

In fact, we can turn directly to page 14a–

Anthony M. Kennedy:

I… I stated an or.

I… what I… I stated at the outset?

Lloyd B. Miller:

–The… the Government took money for its own Federal functions instead of… including contract monitoring–

Anthony M. Kennedy:

Including contract monitoring.

Lloyd B. Miller:

–Including contract monitoring.

Including contract monitoring.

In fact, they say so in their brief and… and defend that action.

The… the sections on page 12a and 13a articulate in quite a lot of detail the nature of the contract support costs that must be added.

Antonin Scalia:

These are strange contracts, of course, aren’t they?

I mean, are there any other contracts that the Government has to enter into?

I mean, the Secretary has to give these tribes the authority to take over, in effect, implementation of the… of a Federal health program, doesn’t he?

Lloyd B. Miller:

That is correct, Justice Scalia.

Antonin Scalia:

Well, I… why would you expect that this strange kind of contract should… should, prima facie, be governed by the same rules as to appropriations as other contracts–

Lloyd B. Miller:

Because–

Antonin Scalia:

–where… where an agency, having due regard to how much money is appropriated, will limit the number of contracts it enters into?

But… but here you’re creating a situation where the agency has to contract and yet has no control over having enough money to… to meet the contractual obligations.

It seems to me a… a strange way to run a railroad.

Lloyd B. Miller:

–It… it is a unique contractual situation, Justice Scalia, but one that Congress fully anticipated.

Lloyd B. Miller:

And… and I would explain it this way.

First of all, there is the Contract Disputes Act which Congress said applies to these contracts.

The contracts were so unique that prior to 1988, the Interior Board of Contract Appeals, in a decision called the Busby case, had ruled that these contracts could not be enforced under the Contract Disputes Act precisely for the reason Justice Scalia articulated.

Congress changed that.

In 1988, Congress amended section 110 of the act, reproduced at the bottom of page 26a, and gave the Court of Claims, then the Court of Claims, and the district courts concurrent jurisdiction over money damages claims under the Contract Disputes Act.

And the legislative history explains that Congress did this precisely to overcome the Busby decision and to make these contracts enforceable for the stated contract price.

Anthony M. Kennedy:

But further to Justice Scalia’s point, don’t the contracts in question themselves contain clauses that say this is not a procurement contract?

Lloyd B. Miller:

The… the procurement contract… that is correct.

Not the contracts themselves, Your Honor.

The… the act says that–

Anthony M. Kennedy:

Oh, the act says that they’re not procurement contracts.

Lloyd B. Miller:

–the contracts are not procurement contracts, Justice Kennedy.

That’s correct.

These contracts began as procurement contracts.

They had been procurement contracts, and even still, they were not enforced under the Court of… the Interior Board of Contract Appeals decision in the Busby decision.

Congress relieved the contractors of the procurement system because they felt that the agency had built up an enormous contract monitoring bureaucracy which it wanted to eliminate.

And for that reason, it eliminated the procurement rules in the hopes that the contract monitoring bureaucracy would be eliminated along with it.

Ruth Bader Ginsburg:

Mr. Miller, do–

Lloyd B. Miller:

Justice Ginsburg.

Ruth Bader Ginsburg:

–on… on the interpretation you’ve just explained to us, does that mean that the Secretary has no authority under this statute or generally to reserve some portion of this for what you call Federal functions, that it… every penny of the appropriation could go to the costs of this contract and nothing left in the till for the so-called Federal functions?

Lloyd B. Miller:

Justice Ginsburg, I… I would put my answer in this context.

There are many sources from which the Government could have reprogrammed to pay these contracts.

It could have been, yes, as we submit, from the funds spent on Federal functions and secretarial administration.

It could have been from the up to $88 million increases Congress was making every year.

It could have been from the up to $98 million in leftover appropriations the agencies had every year, and it could have been from the regional and headquarters offices that the agencies had where they don’t administer services.

Ruth Bader Ginsburg:

But your… your answer is, yes, if it came to that, they–

Lloyd B. Miller:

That’s the duty Congress imposed upon the Secretary.

The Secretary was free not to reprogram.

That’s… that’s a choice the Secretary had and the Secretary made it.

The question is what are the ramifications of that choice and we submit–

Ruth Bader Ginsburg:

–Well, let me ask you another question related.

Suppose… this is an individual action.

These are individual actions.

They’re not class actions.

Lloyd B. Miller:

–Correct, Your Honor.

Ruth Bader Ginsburg:

Do the ones who come to court to sue get paid in full even though there may be many other self-determination contracts out there, and that if you gave them all their fair share, none of them would be paid in full?

Does it just depend on first come to court, first served, and the less litigious are just out of luck?

Lloyd B. Miller:

Your Honor, we… we do not believe that that… that should be the outcome.

That would advantage the contractors that came forward and not take account of the entire situation.

We think the global situation has to be looked at.

The total amount of the contracts that were not paid in fiscal year 1994–

Antonin Scalia:

I mean, you can’t get blood out of a turnip.

I mean, Justice Ginsburg is asking the question, what if there is not enough money to go around?

Lloyd B. Miller:

–If there were only sufficient money to pay half of the contract shortfalls–

Antonin Scalia:

Right.

Lloyd B. Miller:

–without violating the clause and the Secretary had the discretion not to reduce appropriations, or he could, for programs serving other tribes, and then the tribes would only be entitled to half of the shortfall, if there was only a sufficient amount of money.

Anthony M. Kennedy:

Didn’t the tribes get notice they might not get the full amount of the… the CSC, and so they had ample opportunity to cut back on their spending?

Lloyd B. Miller:

No, Justice Kennedy, and… and to the contrary.

In fiscal year 1994, the Indian Health Service was telling everybody they were paying them in full.

They told the General Accounting Office they paid everybody in full on page 32 of the GAO report cited in the Government’s brief.

But–

Anthony M. Kennedy:

So these… these are reliance damages in a sense.

Lloyd B. Miller:

–The… the tribes expected to be paid.

The Shoshone-Paiute tribes were told they would be paid in full in the first year.

Anthony M. Kennedy:

I mean, they… they were out of pocket for money they spent before they knew, other than the statutory notice they had, that they wouldn’t get the full amount?

Lloyd B. Miller:

That is correct.

Sandra Day O’Connor:

Well, when do the tribal contractors know how much money the Government actually will have available to spend?

Lloyd B. Miller:

The contractors don’t know until the year is over because throughout the year, the Government reserves the power, although not exercised, but stated in a circular, to reprogram.

And the appropriations–

David H. Souter:

What… what do you mean by that?

David H. Souter:

You said a second ago the Secretary had the option to reprogram.

What do you mean by reprogram?

Lloyd B. Miller:

–When the Secretary prepares a budget to the Congress, it states usually a lump sum amount of, say, $1.8 billion.

We… we take $400 million off the top or $300 million off the top because that was specified by Congress for certain purposes.

But the balance is a lump sum.

The Secretary crafts a budget.

The budget is not adopted by Congress, just a dollar amount is adopted by Congress.

Now, Congress can step in and take a particular item and earmark that item and cap it if it chooses, but it didn’t do that in these years.

Sandra Day O’Connor:

Yes, but the… the tribes have to enter contracts not knowing how much money is going to be there at the end of the day?

Lloyd B. Miller:

The tribes enter into contracts, as most Government contractors do when they enter into contracts before an appropriation is made, not knowing if the agency will have the money to pay them.

That’s okay.

The problem is when the statute says it’s subject to the availability of appropriations and Congress enacts the appropriations.

It’s been the law for 120 years that at that point, the right to payment vests and the tribe is entitled to be paid.

Sandra Day O’Connor:

All right.

So how was that appropriation money in fact used by the Federal Government, do you say?

Lloyd B. Miller:

The Federal Government–

Sandra Day O’Connor:

There was the appropriation.

Lloyd B. Miller:

–Yes.

Sandra Day O’Connor:

And the tribes had already entered into contracts.

Now, how was that lump sum used?

Lloyd B. Miller:

The agency then, under this Court’s teaching in Lincoln v. Vigil, has complete discretion over how it spends its appropriation except insofar as–

David H. Souter:

Is that what you mean by programming?

Lloyd B. Miller:

–Yes, thank you, Justice Souter, for taking me back to your question.

What we mean is that the Secretary submits a budget, but the budget is not binding on the Secretary.

It’s not binding as a matter of law because Congress didn’t adopt it.

And as conditions change over the course of the year, the agency readjusts its budget, which we call reprogramming.

David H. Souter:

So programming is allocating various segments of the lump sum to various purposes.

Lloyd B. Miller:

Correct.

David H. Souter:

Okay.

Lloyd B. Miller:

And the Secretary retains complete discretion as this Court taught–

Sandra Day O’Connor:

And is that done without regard to the contract amounts that the tribes have entered into?

Lloyd B. Miller:

–Well, it should not be done without regard to the contract amounts–

Sandra Day O’Connor:

Is that in fact how it was done?

Lloyd B. Miller:

–That is in fact how it was done.

Sandra Day O’Connor:

And is it still done that way?

Lloyd B. Miller:

Well, the times have changed.

Since 1998, fiscal year 1998, Congress has imposed caps on the contracts and court costs that the agency has.

So there’s no question the agency cannot pay more than Congress gives it.

When Congress only gives it $100 million or $200 million for contract support costs, that’s it.

The Secretary cannot be sued for failing to pay more.

Antonin Scalia:

But didn’t… didn’t Congress, even before that, impose a significant limitation on how much the Secretary could pay?

What do you with the provision in… in (b) of… of the section that you were reading from?

Notwithstanding any other provision in this subchapter, the provision of funds under this subchapter is subject to the availability of appropriations and the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under this chapter.

I mean, what… what money that the Secretary expends is… is not expended for programs, projects, or activities that serve a tribe?

Lloyd B. Miller:

Justice Scalia, we read this… this clause with… keeping in mind the first sentence first of the sentence.

The first sentence, which begins on the preceding page, page 14a, says that the amount of funds required by subsection (a), (1) shall not be reduced to make funding available for contract monitoring or administration by the Secretary.

And the subparagraph (3) in the middle of page 15a, shall not be reduced by the Secretary to pay for Federal functions.

Antonin Scalia:

Well, that’s all very good, but–

Lloyd B. Miller:

But then there’s an exception.

Antonin Scalia:

–then the last paragraph begins with the word notwithstanding any other provision of this subchapter.

So this–

Lloyd B. Miller:

We–

Antonin Scalia:

–it seems to me, overrides everything else.

Unless… unless you can persuade me that that… that that provision doesn’t give the Secretary the authority to… to allocate the available funds among other activities that serve tribes, I… I think it trumps whatever else you appeal to.

Lloyd B. Miller:

–Justice Scalia, for… for two reasons we think it cannot.

First of all, if that exception swallowed up the rule set forth in the first sentence, it would defeat the whole purpose of the act.

And more, in the statute on page 21, there is a mandatory rule of construction that Congress has articulated which, interestingly enough, the Government never cites in the statutory interpretation case.

And this rule says on page 21, 1(a)(2), each provision of the act–

Antonin Scalia:

Wait.

Lloyd B. Miller:

–Page… sorry–

Antonin Scalia:

21 of–

Lloyd B. Miller:

–21a of our opening blue brief.

Antonin Scalia:

–Okay, 21a, good.

Lloyd B. Miller:

21a, correct.

Each provision of the Indian Self-Determination and Education Assistance Act and each provision of this contract shall be liberally construed for the benefit of the contractor.

That statement is repeated as well in every–

Sandra Day O’Connor:

Oh, fine, but you still have to look at that last sentence in subsection (b) and grapple with what it means.

The Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe.

Lloyd B. Miller:

–So what could it mean?

That’s our challenge.

Sandra Day O’Connor:

Now, what does it mean?

Lloyd B. Miller:

We have to give it meaning.

We believe it means the… as the Secretary always said when… and… and said at the time these amendments were adopted in 1988, that’s services on the ground, the hospitals and clinics.

If I walked into the office of the headquarters of the Indian Health Service in Rockville, Maryland, I’m not going to see doctors and nurses in white jackets.

I’m not going to see patients and counselors.

There aren’t programs serving tribes in these headquarters offices, and in these area offices, large portions of what they do are administrative functions.

David H. Souter:

All right.

May… may I interrupt you there?

And tell me if I understand the… the position in your brief correctly.

I thought the position that you took there was ultimately regardless of what the notwithstanding clause means, there’s enough money to pay all the contracts in the appropriation that is actually made.

And if any money is going to be squeezed, the person who’s going to be squeezed or the… is the… is the agency itself.

Its bureaucracy is going to have less money.

And I understood your argument to be that given the provisions you read earlier in this section, Congress has made a positive decision that if there’s a choice between paying the contract amounts and squeezing the bureaucracy, the bureaucracy gets squeezed.

Is that your position?

Lloyd B. Miller:

That is our position.

David H. Souter:

If that is your position, do you have to even grapple with difficulties about the notwithstanding clause?

Lloyd B. Miller:

Well, we still need to provide some meaning to the… to the provision that says the Secretary may not… does not have to reduce funding for programs serving other tribes.

I guess, I think we do need to grapple with the clause in order not to–

David H. Souter:

But… but I thought you were saying you could… you could… the… the Secretary doesn’t have to reduce funding for other tribes.

The Secretary can pay the full contract costs, and if anybody is going to get the short end, it’s going to be the bureaucracy.

Lloyd B. Miller:

–It’s going to be the bureaucracy.

David H. Souter:

Just give them the… just give them the money.

Lloyd B. Miller:

It’s not going to be the programs on the ground serving the tribes.

It’s going to be the bureaucracy.

David H. Souter:

Okay.

Lloyd B. Miller:

Now, it may be felt–

Antonin Scalia:

To put it… this is a competition between two bureaucracies, the tribal bureaucracy that is administering the program and the Secretary’s bureaucracy which is administering the program of programs.

I mean, it’s… it’s not as though it’s a bureaucracy against the people.

The whole purpose of this was to turn over the bureaucratic management of these programs from Government bureaucrats to tribal bureaucrats.

I mean, it–

Lloyd B. Miller:

–Well, I would… I would–

Antonin Scalia:

–you… you paint it as though the… you know, who cares about the bureaucrats.

The… the Government just wasn’t interested in the bureaucrats.

That may well be, but there… there are bureaucrats at both ends of this thing.

Lloyd B. Miller:

–I say that for two reasons.

First of all, the… the Congress, in our opinion, clearly privileged the tribal contracts over the Secretary’s Federal functions.

But more practically, let’s look at the Shoshone-Paiute Tribes.

They took over a hospital that had a $5 million budget in round numbers, and the contract support costs requirement was $2 million.

So the contract was in round numbers $7 million.

So they get the hospital, $5 million to run it.

They don’t get the $2 million.

Now, they have $3 million to run the hospital.

It’s not that they didn’t get their bureaucracy.

They didn’t get the full hospital operational budget because they had to pay the fixed costs of carrying insurance, undertaking the audits required by Federal law.

There were actual reductions in services so severe, in fact, that the Shoshone-Paiute Tribe nearly lost accreditation.

Stephen G. Breyer:

Can I ask you a basic question–

Lloyd B. Miller:

Yes, Justice Breyer.

Stephen G. Breyer:

–which maybe others understand, but I’m confused.

Imagine that this has nothing to do with Indians.

It is simply an ordinary contract.

Stephen G. Breyer:

Now, my understanding is that ordinary contracts say subject to appropriations.

So we have to decide was there an appropriation.

In our imaginary department of Government, the appropriation is $1 billion.

Nothing is earmarked for anything.

They enter into contracts that amount to $999 million.

Now, they pay out $990 million, and their… what the department says is, look, everybody knows we need at least $10 million to run our central bureaucracy.

So there’s no valid contract here.

The appropriation wasn’t made.

Now, my understanding of ordinary Government contract law is to decide whether that $10 million was in principle available for the contracts.

You look to something called the purpose-time-amount test.

So was it during the same time?

Is it in an appropriate amount?

Yes.

But is it available for this purpose?

Ah, I’m not sure.

All right.

Now, I want… if I have the… the theory of it right, I want you to tell me what the money was in your case that is the equivalent of the $10 million in my example that you believe in principle was available to pay these… for this Indian expenditure.

Just pretend it’s a regular contract.

What is the equivalent of that $10 million?

Lloyd B. Miller:

The equivalent of the $10 million would be sums not spent on anything–

Stephen G. Breyer:

Yes.

Lloyd B. Miller:

–in this case, up to $100 million.

Stephen G. Breyer:

Yes, okay.

And anything else?

Lloyd B. Miller:

Any of the increases, any of the sums.

And then we move to this statute–

Stephen G. Breyer:

Well, forget this statute for a second because I’ll stop you there.

I want you to tell me why those sums… I get the time.

I get the amount.

Lloyd B. Miller:

–Why the purpose.

Stephen G. Breyer:

Explain to me why it is one of the purposes for which those appropriations were made, i.e., the equivalent of the $10 million, to go pay for this.

Lloyd B. Miller:

Well, that’s one of the things the… the Government and we agree upon.

Stephen G. Breyer:

It was one of the purposes.

Lloyd B. Miller:

One of the purposes was paying contracts, and that’s because in this act, the appropriation says here’s $1.4 billion or $1.8 billion to carry out the Indian Self-Determination Act.

So that satisfies the purpose test.

Stephen G. Breyer:

All right.

So you think… you and the Government agree then that were this an ordinary contract case, there is no doubt that a legally binding contract would have been entered into and the clause, subject to appropriations, would not work for the Government.

Lloyd B. Miller:

That is correct, Your Honor.

Stephen G. Breyer:

Okay.

Ruth Bader Ginsburg:

Well, you can’t say that the Government agrees to that.

You certainly agree to it.

Stephen G. Breyer:

No, no.

Were it an ordinary–

Lloyd B. Miller:

The Government–

Stephen G. Breyer:

–were it an ordinary contract.

Lloyd B. Miller:

–In… in the hypothetical.

No.

I think the Government would agree that the rule of Ferris and Blackhawk, the Dougherty rule from the Court of Claims, 1983, all stand for the proposition when you sign a contract with the Government and a lump sum appropriation comes, it’s not your job to start monitoring Government operations and figuring out how much do they want to boost their functions for this or that or the other, and the–

Stephen G. Breyer:

So our issue as far as you’re concerned… and I’ll ask the Government the same question… is, is this contract different from an ordinary contract because of A, B, C, D Indian reservations, et cetera?

And your claim is, I can’t find any difference.

And their claim is there will be some difference.

Is that right?

Lloyd B. Miller:

–That is correct.

They claim these aren’t contracts… Justice Kennedy.

Anthony M. Kennedy:

Well, you did say the… these contracts were unique.

Lloyd B. Miller:

These contracts are unique.

The contracts in Winstar were unique.

The contracts in the United States v. New Mexico advance costs… advance funded cost reimbursable contracts.

Many contracts are unique.

The question is whether the distinction makes a difference in the law.

Lloyd B. Miller:

The distinction here that these are not procurement contracts, that can’t be decisive.

Anthony M. Kennedy:

Well, the Government says it’s unique because the tribes are providing governmental services.

It doesn’t really cite us a case where, say, a city or a subdivision has sued under a contract.

Lloyd B. Miller:

But that’s not unique either because the… the Government, the Department of Defense in Iraq contracts out governmental services, the provision of food to our troops in Iraq.

That’s a quintessential governmental services, feeding the military.

But they contract it out.

No one would suggest there that just because it’s a governmental service, it qualifies that contract as a lesser contract than any other contract.

Antonin Scalia:

Well, they didn’t contract it out to the government of Iraq.

They contracted it out to a private contractor.

I mean, what… what makes this unique is that the whole purpose of it was to give these… these tribes more governmental power, more self-determination.

The whole purpose was to enable the tribes to act as governments.

Lloyd B. Miller:

Absolutely.

And even Congress considered–

Antonin Scalia:

That’s… that’s what makes it different from private contracts–

Lloyd B. Miller:

–We–

Antonin Scalia:

–even… even with Halliburton.

Lloyd B. Miller:

–We–

Antonin Scalia:

I mean, Halliburton is not an Indian tribe and doesn’t purport to be governing anybody.

Lloyd B. Miller:

–We submit that that difference was considered by Congress.

In the 1988 amendments, there’s even language that says, we’re thinking about maybe calling this an intergovernmental agreement, but we’ve decided to call it a contract because we want it to be enforceable as a contract, just as other Government contracts for goods and services are enforced.

And that was the language of the… of the Senate report.

They then imposed the Contract Disputes Act and provided a remedy in money damages.

In those respects, along with the canon of construction, we believe that these contracts are fully enforceable for the stated contract amount.

I’d like to reserve the balance of my time, Justice Stevens.

John Paul Stevens:

Thank you.

Mr. Srinivasan.

Sri Srinivasan:

Thank you, Justice Stevens, and may it please the Court:

Apart from the roughly 2 percent of the annual lump sum appropriation that the Secretary withheld for performance of those core agency functions that the agency itself was required to perform, the Secretary allocated the entire remaining 98 percent of its lump sum appropriation among tribes.

Now, the tribes have to point to some source of funding within that lump sum appropriation.

Stephen G. Breyer:

Well, they just did, the 2 percent.

Stephen G. Breyer:

So my question to you is the same.

I asked, let’s imagine this had nothing to do with tribes, nothing to do with it.

It was a typical, ordinary Government contract for pencils.

All right?

Or for soda water.

Now, and everything were the same.

Under those circumstances, just an ordinary contract… and they point to that 2 percent and they say that is legally speaking… we didn’t expect you to pay it.

We just won a lawsuit in the Court of Claims.

But… but we have… we have a contract here.

That’s what we’re just saying.

The… the subject to appropriation clause doesn’t nix the contract because that 2 percent is available, legally speaking, time, purpose, and… and amount.

Okay?

Classic.

Now, what’s the Government’s view there?

Sri Srinivasan:

No.

Stephen G. Breyer:

Is it available or not were this an ordinary contract?

Sri Srinivasan:

No.

With respect to the 2 percent that’s reserved for inherent Federal functions, that’s not available.

Stephen G. Breyer:

I’m asking… all right.

Are… is the Government’s view then let’s treat this just as an ordinary contract?

Still it… there was no money available.

Sri Srinivasan:

With respect to–

Stephen G. Breyer:

Legally speaking under the time-purpose-amount test.

Sri Srinivasan:

–Well, Justice Breyer, I’m drawing a distinction between the 2 percent that’s reserved for core agency functions and–

Stephen G. Breyer:

No.

Sri Srinivasan:

–it’s been a background principle of Government contracting law that there are certain core agency functions that… that the Government is required to perform for itself and that it can’t contract out.

So I think that informs the interpretation of the subject to availability clause.

Stephen G. Breyer:

Now, I would like an answer to my question, yes or no.

If this were an ordinary contract with a subject to appropriations clause, is… would the Government be saying this is invalid because the appropriations were not there?

Sri Srinivasan:

Well, you have to look at the particular context.

Stephen G. Breyer:

There must be a yes or no answer to that.

Sri Srinivasan:

It would be no if this statutory regime governed, Justice Breyer.

Stephen G. Breyer:

No.

What it is is a contract for pencils.

Can you not… is it impossible–

Sri Srinivasan:

If… if all–

Stephen G. Breyer:

–to make… you see what I’m driving–

Sri Srinivasan:

–If… if all that’s at issue is a standard subject to availability clause in a contract and there were no reduction clause, as there is in this statute, and you’re dealing with the standard procurement context, then there is a Court of Claims decision, the Blackhawk decision, that suggests, albeit in a footnote, that in that situation, there are funds available in the sense that they’re legally unrestricted.

Stephen G. Breyer:

–Correct, and which are the funds that are… that would be available here?

Which are they?

Sri Srinivasan:

There aren’t any funds that are available here in our view because–

Stephen G. Breyer:

If this were under Blackhawk.

Sri Srinivasan:

–Under Blackhawk, it would be… it would… it would essentially affect the entire lump sum appropriation because there’s no legal requirement that the lump sum appropriation be… be directed in any particular manner.

Now, there are some provisions in the–

David H. Souter:

That includes the 2 percent that you keep referring to.

Sri Srinivasan:

–That… that would include in the… that would include the 2 percent.

But there are provisions, I should note parenthetically, in the appropriations act that say specifically, for example, that not to exceed a certain amount is to be used for a particular function or at least a certain amount is to be used, for example, for contract health services.

So you’d have to take into account–

Stephen G. Breyer:

Okay.

Then let me do this then.

Sri Srinivasan:

–those particular provisos.

Stephen G. Breyer:

You say if this were a classic, ordinary contract, the money would have been available legally speaking.

Nobody says practically speaking, and they could have brought their lawsuit.

Now, tell me specifically, if you can… and this may take you the whole time.

You want to make whatever argument you want.

What is it that’s special about this contract that brings it out of ordinary contracting principles?

Sri Srinivasan:

Well, first and foremost, the text of the statute.

If you look at page 15a of the appendix to… to the tribes’ briefs, this isn’t your standard, garden variety subject to availability clause.

You have to look at the particular context in which this statute–

Sandra Day O’Connor:

Well, the language is the same.

Sri Srinivasan:

–It’s not, Justice O’Connor, with respect.

It says, notwithstanding any other provision… and I’m reading at the bottom of page 15a… the provision of funds under this subchapter is subject to the availability of appropriations and… and this is–

Sandra Day O’Connor:

That phrase is the same, subject to the availability of appropriations.

Sri Srinivasan:

–That particular phrase resembles the one that Justice Breyer posited in his hypothetical.

Sandra Day O’Connor:

Exactly.

Sri Srinivasan:

But the term available… and I think this is critical.

The term available is repeated in what’s been referred to as the reduction clause, and I don’t think one can understand what the term available means unless it considers the meaning of that term throughout that entire sentence.

David H. Souter:

But… but the other… the other side says you don’t have to get to that because you could have paid the contract amounts here without reducing funds available for other tribes.

It’s simply that it would have squeezed you in your budget, your… your headquarters operating budget for IHS.

So they say, if I understand them, that the… that the nonreduction clause doesn’t save you here because you could have paid it without reducing things for other tribes.

Sri Srinivasan:

I… I think that argument is incorrect.

First of all, it’s an incorrect interpretation of the terms of the reduction clause.

But second of all, the notion that funds for inherent Federal functions, the 2 percent that the agency reserved to perform its core agency functions, were available for contracting is contrary to… to the terms of the ISDA itself.

And if you’ll look at page 12a… and I’m quoting from 450j-1(a)(1)… what provision says is the amount of funds provided under the terms of self-determination contracts include the amount that the Secretary, quote, would have otherwise provided.

And then later on down in the paragraph–

Antonin Scalia:

I don’t see that.

Where?

Sri Srinivasan:

–I’m sorry.

It’s–

Antonin Scalia:

Not less.

Right?

Sri Srinivasan:

–Shall not… shall be not less than the amount that the appropriate Secretary would have otherwise provided.

And then further down in the paragraph in the last… in the last clause, including support of administrative functions that are otherwise contractable.

And what otherwise contractable denotes is that there are certain functions that are not otherwise contractable, namely those core, inherent Federal functions that the agency itself is required to provide.

And so what 450j-1(a) implements is the background understanding that funds for core agency functions don’t have to be turned over to the contracting tribes because the agency requires those funds in order to continue essentially to exist as a Federal agency.

Anthony M. Kennedy:

But… but I thought the submission of the petitioners’ counsel was that some of these funds were used to monitor the contracts which are functions the tribes could have performed.

So is there a factual disagreement here?

Sri Srinivasan:

I don’t think so, Justice Kennedy.

I think it’s more of a characterization disagreement.

There… it’s true that in a descriptive sense, one might refer to some of these funds as used for contract monitoring, but what 450j-1(a) says is that whatever you might call it, the funds that are used for core agency functions are outside the funds to be… to be turned over.

Stephen G. Breyer:

It doesn’t say that.

What it says is otherwise contractable.

And they could certainly… for a lay person like me in this, you’d think, well, we could have a provision that says $180,000 is hereby authorized to be spent only for the Secretary of Veterans Affairs or Secretary of Interior.

Well, if it said that, then that’s not otherwise contractable because there’s a statutory limit.

Antonin Scalia:

But… but–

Stephen G. Breyer:

So otherwise contractable sounds like a… a statutory question.

Antonin Scalia:

–But it… it’s not talking about money that’s otherwise contractable.

It says, including supportive administrative functions that are otherwise contractable.

It’s talking about a limitation upon the contractability of functions–

Sri Srinivasan:

Correct.

Antonin Scalia:

–not the use of funds.

Sri Srinivasan:

Well, it’s talking about both because the… the first part of subparagraph (1) is the amount of funds.

It’s relating to the amount of funds that are required to be transferred, and what it stands for is that funds for supportive administrative functions that are not otherwise contractable, i.e., those core agency functions that the agency is required to perform itself, those funds aren’t required to be turned over to contracting tribes.

And that just reflects the common sense principle that the agency has to continue to exist to perform some core functions.

Ruth Bader Ginsburg:

But how do you… how do you square that with the… on page 14a… reductions and, as Mr. Miller read to us, shall not be reduced to make funding available for contract managing… monitoring or administration by the Secretary, shall not be reduced by the Secretary to pay for Federal functions, including but not limited to, and then a string of what I assume falls under the heading Federal functions.

Sri Srinivasan:

Justice Ginsburg, the way we square that under the statute is that the leading… the initial sentence in subsection (b) says the amount of funds required by subsection (a) of this section.

And our view of the statute is that funds for inherent Federal functions were never required to be transferred under subsection (a) to begin with.

And so what (b) deals with is the funds that are left over after the funds for inherent Federal functions are taken off the top.

Ruth Bader Ginsburg:

So are these noninherent Federal functions shall not be reduced to pay for Federal functions?

So there’s inherent Federal functions and noninherent?

Sri Srinivasan:

Oh, absolutely there are.

The Federal functions is the broader set of… it could essentially encompass everything the Federal Government does.

Inherent Federal functions refers to that core set of functions that the agency itself is required to perform.

And the distinction between inherent Federal functions and Federal functions, although it might seem trivial as a semantic matter, is reflected in fact in the definitions in title V of the ISDA where it specifically defines inherent Federal functions as a subset of Federal functions.

David H. Souter:

Does it ever define them as noncontractable?

I mean, I… I… your answer, I suppose, is well, what… what do you think they’re talking about, but does it ever expressly get to–

Sri Srinivasan:

It… it does.

David H. Souter:

–the point of contractability?

Sri Srinivasan:

It does, Justice Scalia… Justice Souter.

Excuse me.

David H. Souter:

Thank you, but apologize to him.

[Laughter]

Sri Srinivasan:

And we describe the… the relevant provision in our brief, if you’ll bear with me for just one second, on page 31.

When Congress enacted the title IV self-governance provisions that relate to the BIA… and this is at the beginning of the first partial paragraph that begins with of particular significance.

There’s a provision there, 25 U.S.C. 458cc(k).

And the provision reads that nothing in this section is intended or shall be construed to expand or alter existing statutory authorities so as to authorize the Secretary to enter into any agreement with respect to functions that are inherently Federal.

And I think what that signifies is that there are some functions that are not contractable and can’t be turned over to the tribes.

Stephen G. Breyer:

That… that all may be true, of course.

They’re talking about don’t contract out to the Indians something that should be done in Washington.

But what has that got to do with the issue?

We’re talking, I thought, about… about Government contracts.

People who enter into Government contracts need certainty.

They have to know whether that word, subject to appropriations, invalidates the contract or whether they have a valid contract.

And a set of principles have come up that are used to decide that.

And under that set of principles, money is available to pay for the contract if it’s time, purpose, and amount.

Okay?

That’s the principle.

And–

Sandra Day O’Connor:

You don’t think–

Stephen G. Breyer:

–and I don’t see anything contrary to that.

Sri Srinivasan:

Justice Breyer, one background principle… and it’s reflected, by the way, in the terms of the contracts themselves.

One background principle is that funds for inherent Federal functions are not required to be transferred to tribes.

And the contracts–

Sandra Day O’Connor:

–Well, Mr. Srinivasan, do you say that the contracts that were entered into by IHS and the tribes did somehow contract away Federal… inherent Federal functions?

Sri Srinivasan:

–No.

They specifically–

Sandra Day O’Connor:

They didn’t violate that section, did they?

The contracts that we’re talking about.

Sri Srinivasan:

–They specifically did not transfer–

Sandra Day O’Connor:

No.

Sandra Day O’Connor:

So we’re not dealing with that.

We’re dealing with contracts that didn’t violate that section.

And you’re just saying that some of the lump sum appropriation was diverted by the Government to pay for some kind of core Federal function, not that the contracts violated that provision.

Sri Srinivasan:

–No.

The… that’s correct, Justice O’Connor.

What I’m responding to is the suggestion that funds that were allocated by the Secretary to pay for inherent Federal functions were required to be diverted to pay for the indirect costs–

Anthony M. Kennedy:

You’re not saying… you’re addressing not what was contracted out, but what funds are available.

Sri Srinivasan:

–Correct.

Anthony M. Kennedy:

That’s where your argument is going.

Sri Srinivasan:

Correct.

It relates to the funds that are available.

And the tribes’ position–

Antonin Scalia:

And you rely on the statement in (a) that the… the only funds that are available are funds that include funds to… to pay for supportive administrative functions that are otherwise contractable.

Sri Srinivasan:

–Right.

Not funds–

Antonin Scalia:

And not funds that are used to pay for administrative functions that are not contractable.

Sri Srinivasan:

–Right.

We think that funds for inherent Federal functions were taken off… off the–

John Paul Stevens:

Can I–

David H. Souter:

You said that–

John Paul Stevens:

–Can I ask you sort of a basic question that I’m having trouble following?

As I understand, you’re saying 98 percent of the appropriation have been allocated to programs, projects, activities, and so forth that can’t be reduced.

Now, is there anything in the statute that would have prevented the Secretary from allocating only 96 percent of the budget to those funds?

Sri Srinivasan:

–Well, there is, Justice Stevens, in the following sense.

It’s not at all the case that the Secretary had unfettered discretion in composing the allocation scheme in any fiscal year.

John Paul Stevens:

But his budget that he actually worked out with the 98 percent was not mandated by the statute, as I understand.

Sri Srinivasan:

In… in part it was mandated by the statute.

John Paul Stevens:

In part but not in whole.

Sri Srinivasan:

Perhaps not in whole–

John Paul Stevens:

Well, that’s the point.

Sri Srinivasan:

–but at least in significant part.

And let me… but I think this is significant, and if I can just walk the Court through the process by which the budget is developed and any appropriation ultimately is allocated.

The Secretary has always, both before the ISDA and after the ISDA, taken the current year’s allocation across programs as a given, as a baseline from which the next year’s allocation will be built.

And that’s reflected in the terms of the statute on pages 14a to 15a of the appendix to the blue brief.

There’s a provision, 450j-1(b)(2), that says that the amount that’s transferred to contractors shall not be reduced by the Secretary in subsequent years except pursuant to certain limited criteria and one of which, the principal one of which, is the reduction in appropriations.

But we’re not dealing with that in the relevant fiscal years.

There was always an increase.

And so the Secretary, pursuant to the statute, kept the funding for across programs at least at the level that it was at the previous fiscal year.

Now, in addition to that, the Secretary builds two… two considerations on top.

The first is mandatory across-the-board increases for things such as salary COLA’s and inflationary adjustments.

And that’s a standard feature of budgeting, and it’s reflected again in the terms of the statute.

And that… I’d point the Court to page 9 of the Government’s brief, the gray brief, where we cite a provision, 25 U.S.C. 1680a.

John Paul Stevens:

Is the… is the nub of what you’re trying to tell me is that the 98 percent was, in fact, mandated by a statute?

Sri Srinivasan:

It was… I… I think in principal part it was mandated by the… by–

John Paul Stevens:

Principal part, but–

Sri Srinivasan:

–Well, let–

John Paul Stevens:

–Does that mean that there was not enough?

Sri Srinivasan:

–At least as far–

John Paul Stevens:

They could have made it 97 percent–

Sri Srinivasan:

–insofar as what I’ve said with respect–

John Paul Stevens:

–and had enough money–

Sri Srinivasan:

–Sorry.

John Paul Stevens:

–to pay these contract obligations.

Sri Srinivasan:

No, Justice Stevens.

John Paul Stevens:

See, the thing that troubles me is it seems to me your reading of the statute makes the contractual problem… provision illusory because they can always allocate funds to all these other projects and say, well, we’ve already used up the money.

Sri Srinivasan:

No, I don’t think that they have discretion to do that.

And that’s what I’m trying to explain.

At least with respect to the existing baseline and a mandatory across-the-board increases, it’s mandated by the statute that the… that the Secretary conduct his budgeting allocation process in the way that he’s done.

With respect to the mandatory across-the-board increases, on page 9 of the Government’s brief, 25 U.S.C. 1680a, a provision that relates specifically to the administration of the Self-Determination Act, it requires the Secretary to provide funds to contracting tribes for, quote, cost-of-living increases, closed quote, and, quote, other expenses relating to the provision of health services, closed quote, on the, quote, same basis as such funds are provided to programs and services operated directly.

In other words, with respect to mandatory across-the-board increases, the Secretary has to allocate those proportionately amongst contracting tribes and non-contracting tribes.

Sri Srinivasan:

And that leaves the additional set of an increase from one year to the next year that deals with specific targeted items, and principally that would include, for example, staffing of new facilities that come on board during the course of a particular fiscal year.

And with respect to those specific targeted items, the critical point is that the contracting tribes often benefit from the addition of those and from the enforcement by the Secretary of those sorts of earmarks.

For example, in this particular case, the… one of the facilities that’s at issue is the Stillwell clinic in Oklahoma.

That was a new facility that came on board in the early 1990s and for which the… for which the Cherokee Nation assumed administration of it through a self-determination agreement.

Now, the staffing for that facility was specifically earmarked in the Secretary’s budget submissions and in… in Congress’ appropriation committee reports.

And it, of course, is in the Cherokee Nation’s interest to ensure that those earmarks are honored.

John Paul Stevens:

Are you telling me that the committee reports are… are binding law?

Sri Srinivasan:

They’re not binding law, Justice Stevens.

We fully recognize that.

But at the same time, I don’t think that what Congress intended to do was to require the Secretary to completely ignore the committee reports.

David H. Souter:

–No.

But you got a conflict apparently between the committee reports and what seems to be pretty clear law, which says we’re going to treat these contracts as contracts, not as intergovernmental agreements.

And in… in that conflict, I don’t see why contracting principles don’t trump the committee reports.

Sri Srinivasan:

It’s not just the committee reports, Justice Souter.

It’s the reduction clause.

The reduction clause is a part of the statute and no one has ever suggested the reduction clause doesn’t inform the proper interpretation of the contract.

David H. Souter:

And… and their… their argument is that you can pay the contract amount without robbing other tribes of the amounts that the… that the nonreduction clause refers to.

They are saying… I think they’re saying, look, you, the governmental bureaucracy, get squeezed.

Yes.

And if so, the contract comes first and you have to live with the squeeze and go back to Congress and say, we’re doing what you told us and we’re getting squeezed out of existence.

I think that’s what they’re saying.

Sri Srinivasan:

That is what they’re saying, Justice Souter, but with respect to, I think it’s incorrect.

The Government bureaucracy consists of two separate types of bureaucracy.

There’s that core bureaucracy that is the inherent Federal functions.

And one of their arguments is that the Secretary was required to divest himself of the funds that were necessary to perform those functions.

Stephen G. Breyer:

No, he’s not.

But if… if… where I’m really coming from, to be honest… and I’d like… you might as well reply to what I’m actually… is why I’m asking these slightly hostile questions.

[Laughter]

I… I read here… look, the question really is was this money like the bureaucracy money.

Is it legally speaking an appropriation available, not practically speaking but legally?

Stephen G. Breyer:

And here it seems to me, in looking through this somewhat quickly, that you say no, but the Board of Contract Appeals say yes.

And so I think in my mind, you know, one group of people who really know about this is the Board of Contract Appeals.

So if they’re saying that money from a contract point… a point of normal contract law is legally available, I promise you I’m predisposed to think they’re right.

So I might as well expose that to you so you can tell me now why I’m wrong or they’re wrong or whatever.

Sri Srinivasan:

Because, Justice Breyer, I think the core of it is that even if you think that they’re right, that these funds are legally available, that’s not enough under the ISDA because the ISDA specifically reserves to the Secretary the discretion that he not be required to reduce funding for programs, projects, or activities serving a tribe in order to make funds available to another tribe under this subchapter.

Stephen G. Breyer:

Well, there is… is… the kind… the money that’s available to one tribe can’t be taken for the other.

But I thought the Board of Contract Appeals was saying taking that into account, there’s still enough money left over.

Am I wrong about that?

I thought you should take money from one tribe to give it to another.

What did they think?

Sri Srinivasan:

No.

They thought… the… the board… the Federal Circuit at least, which echoed the Board of Contract Appeals, thought–

Stephen G. Breyer:

Well, I’m thinking the Board of Contract Appeals and the Federal Circuit.

Sri Srinivasan:

–Well, I don’t think the Board of… of Contract Appeals really wrestled directly with where the funds were coming from.

They just thought that legal availability would be sufficient.

Now, what the Federal Circuit said was that funds for inherent Federal functions are available.

And we think that’s wrong for the reasons I’ve said.

I don’t think those funds ever came into the group of funds that were subject to be transferred to begin with.

But even if you thought that they did, I think it’s clear that funds for inherent Federal functions are funds for programs, projects, or activities serving a tribe in the sense that one example of a core Federal function–

David H. Souter:

No, but if that’s true, then everything… then every penny in the… in the IHS bureaucracy qualifies.

I mean, that swallows the… that swallows the entire budget.

Sri Srinivasan:

–Well, let’s… Justice Souter, if I… if I could, let’s look at the particular sources–

David H. Souter:

No, no.

But I mean, just conceptually isn’t that… isn’t that the… the implication of what you’re saying?

Antonin Scalia:

You… you can’t limit it to inherent Government functions.

Both the inherent and the noninherent Government functions would fall within this provision–

David H. Souter:

Yes.

Antonin Scalia:

–if you read it as broadly as you’ve just read it.

Sri Srinivasan:

–Well, I… I guess the way I’d like to make the point is to say that the sources of funds that they point to, which include inherent Federal functions and the… the noninherent Federal function bureaucracy that supports the administration of programs that serve tribes that are directly served by the Federal Government, those two are in fact programs, projects, or activities serving a tribe.

With respect to the administrative support–

Ruth Bader Ginsburg:

On… on that point… on that point, in the Federal Circuit Judge Dyke expressed considerable displeasure with the Government because he said three times I said, tell me what existing programs with other tribes would have been reduced if these contract support costs are paid in full.

And he said, I asked them again and again and again, and they were unresponsive.

So since the Government declined to tell the court what programs… existing programs with other tribes would have been reduced, mustn’t we assume, as I think the Federal Circuit did, that the proof is unavailable and no existing program with other tribes would have been diminished?

Sri Srinivasan:

–I don’t… I don’t think so, Justice Ginsburg.

I mean, one straightforward reason why you don’t have to take that assumption is that it’s not only the Federal Circuit case that’s before the Court, it’s also the Tenth Circuit case.

And there’s… there are declarations in the Tenth Circuit case that specifically assert that diverting funding for… to pay for the contract support costs of these tribes would have required reducing funds for programs, projects, or activities serving a tribe.

Ruth Bader Ginsburg:

Now, what does that mean?

Sri Srinivasan:

So–

Ruth Bader Ginsburg:

I mean, one thing is existing contracts, things that are already ongoing, and then another thing is, well, we think that there’s a new program that could be good for some tribe.

So we’re going to put that new program in and say that that steps in front of these contract support costs.

Are we talking just about existing programs that… that the Government has made a commitment to, or are we saying the Government is at liberty to benefit tribes?

And so what if the contract support costs are, as a result, diminished?

We’re still doing good for tribes.

Sri Srinivasan:

–We’re talking about both existing programs and new programs, and with respect to new programs, there’s… it’s every bit as likely that those new programs would benefit contracting tribes as noncontracting tribes.

And again, one of the new facilities–

Antonin Scalia:

It’s strange to talk of reducing… is… is not required to reduce funding for a new program.

I mean, for a new program, there isn’t any funding.

How can you reduce the funding for a new program?

Sri Srinivasan:

–Because–

Antonin Scalia:

That provision makes sense with regard to existing programs, but it doesn’t make any sense with regard to proposed programs.

Sri Srinivasan:

–Well, I don’t think that reduce necessarily takes the existing year’s appropriation as the baseline.

We think that what it takes as the baseline is the current year’s appropriation allocation which takes into account increases.

And one way to see that is 25 U.S.C. 1680a, which is the provision that I cited earlier that requires the Secretary to apportion mandatory across-the-board increases on a proportionate basis as between contracted programs and noncontracted programs.

And what that provision means is that the reduction takes into account those mandatory across-the-board increases from year to year.

So in some sense, I think reduce does mean this year’s allocation of appropriations as opposed to last year’s spending amount.

David H. Souter:

Mr. Srinivasan, you… you alluded a moment ago in… in answering Justice Ginsburg, I guess, to declarations on file on the Tenth Circuit case that… that specifically said we would have to reduce funds available for other programs.

Did those declarations get specific in the way that her original question was… was asking about?

Did it say… did the declarations say we will have to reduce the X program for the Navajo Tribe and the Y program for the Apache Tribe and so on, or was it… did the declarations simply say, as a general matter, we would have to reduce allocations for other tribes?

Sri Srinivasan:

Well, they… they make the point as a general matter, and they also give an example.

I think the one example that they give… and maybe there are more… is… is a diabetes program.

Sri Srinivasan:

But I think it’s more the general principle–

Ruth Bader Ginsburg:

Was that a new program or an existing program?

Sri Srinivasan:

–That’s an… the… the particular example is an existing program.

But I think it’s more–

John Paul Stevens:

It seems to me you can interpret those comments as saying we don’t… they did not leave enough room in the budget for the programs we now want to support and our prior contractual obligations.

Sri Srinivasan:

–You’re… you’re speaking with particular respect to the new programs, Justice Stevens?

John Paul Stevens:

Yes.

It seems to me that you can interpret what you’re saying as the… as the… the Government adopting a budget in which there’s not enough room for all the programs it wants to support in the current year and continuing to honor the obligations under the existing contracts.

Sri Srinivasan:

Well, I don’t think that even with respect to the current year there wouldn’t be enough money to pay for the complete shortfall in contract support costs.

If you look at the figures, the shortfall in contract support costs, for example, in 1997 cumulatively was $82 million, and that’s… that is more than the amount of the appropriation increase from FY 1996 to FY 1997.

It’s more than the amount that was reserved by the Government for inherent Federal functions.

And so even if you accepted that interpretation, it wouldn’t be sufficient to fully fund the contract support costs.

Sandra Day O’Connor:

Is there some way to avoid these problems now?

Has anything changed?

Sri Srinivasan:

Justice O’Connor, Congress changed things by imposing a statutory cap, explicit statutory cap, on contract support cost funding beginning with 1998.

It had done so since 1994 for the BIA and it did so beginning in 1998 with respect to IHS.

Ruth Bader Ginsburg:

Why was there that difference between the BIA that got the statutory caps earlier and not till, was it, 4 years later for the IHS?

Sri Srinivasan:

I think the difference lies in the extent to which there was perceived to be a shortfall.

My understanding is that there was a shortfall already in BIA programs whereas the shortfall didn’t really become evident with respect to the IHS until 1994 and beyond.

And that’s why you might see the discrepancy between the two.

But Congress also acted, by the way, in 1998 in the 1999 Appropriations Act in enacting section 314 of the 1999 Appropriations Act.

And I think, if nothing else, section 314 at list… at least expresses the view of a subsequent Congress that the Secretary’s allocation scheme from 1994 to 1997 was legitimate and was fully within his discretion under the ISDA.

And under this Court’s decisions in Red Lion and its progeny, that determination by a subsequent Congress is at least entitled to great weight in determining what the Secretary appropriately exercised discretion in 1994 through 1997.

So even if you thought that there was some doubt on whether the Secretary had carried out his functions consistently with the ISDA, I think Congress’ saying later in the 1999 Appropriation Act that its view was that Secretary had done so legitimately should push the Court towards ruling in our favor on the initial interpretation of the ISDA.

I want to address really quickly, if I could, the notion that the funds for administrative support for programs that are administered directly by the Federal Government are available.

And that would have significant consequences because one of the policies underlying the act is not only to protect the interests of tribes that are currently entered into self-determination contracts, but it’s to protect the amounts that are available to tribes that might some day choose to enter into self-determination contracts.

And if, under the tribes’ view, the Secretary was required to divert the entire amount of the increase in any particular year to contracting tribes or to… to divert the entire amount of administrative support for… for noncontracted programs to contracting tribes, the effect of that would be to freeze in place the amounts that were available for potentially contracting tribes in future years.

Thank you.

John Paul Stevens:

Mr. Miller, you have about 4 minutes left.

Lloyd B. Miller:

Justice Stevens, thank you.

Lloyd B. Miller:

First, I’d like to address the availability of appropriations clause briefly.

That is a term of art with a well-established meaning.

This Court in Morissette said that if… unless there’s a contrary direction from Congress that the term of art should not be given its well-established meaning, it controls.

And that is the meaning, purpose, time, and amount, that the appropriation is available for the purpose during the time and in the amounts necessary to fully–

Stephen G. Breyer:

I think they disagree with you about the purpose in respect to the core Government function.

Lloyd B. Miller:

–Secondly, with regard to the core governmental functions, in Blackhawk, the contractor had a settlement with the Veterans Administration.

The Veterans Administration had to reprogram.

From where?

We don’t know, but the Veterans Administration had to reprogram and wanted to get approval from the Congress for that reprogramming action.

Congress then stepped in but after the payment was due and forbade any reprogramming, and the Court then held when the payment was due, money was legally available and it doesn’t matter where it comes from.

There is no protection for inherent Federal functions.

It may have come from some other hospital budget.

It may have come from some other activity of the Veterans Administration.

No doubt everything the VA does is important, but it doesn’t mean it didn’t have a legal obligation to pay the contract.

There is no rule that has an IFF exception to the governmental duty to pay, and if there was, it would upset Government contract law deeply as the amicus brief from the National Chamber explains.

Secondly, when funds are not available, we know what happens.

This Court’s decision, Justice Brandeis’ decision for the Court, in Sutton explains what happens when funds are not available.

There was a line item appropriation of $20,000 for a construction project.

We understand that the contractor was on notice.

Everything is square.

Here, the entire lump sum appropriation was available, and I’d like to give the Court a sense of where the money could have come from, not that the Government had to do it.

Just as in Blackhawk, if they chose not to reprogram, that’s their right.

But then there’s a remedy.

Where could the money have come from?

In 1994, there was slightly under $2 million in a shortfall, just to the Cherokee contractor.

No other contractor was apparently shorted.

There was up to $98 million in leftover appropriations that year.

There was 55… $88 million in an increase, up to $88 million in increase every year from $36 million to $88 million.

There was $25 million in inherent Federal functions.

They couldn’t have shaved that by 10 percent to pay this contractor?

Lloyd B. Miller:

Not that they had to.

They could have taken some of it from there, some of it from the leftover, some of it from the increase, some of it from the offices at headquarters and area offices.

That was their decision.

But the contractor didn’t take the risk that the Secretary would say, at the end of the day, I’ve decided to allocate 100 percent of my money this way, and by golly, there’s nothing left for you.

No contractor takes that risk in dealing with the Government, and surely, a tribal contractor with a mandatory contract set forth in the statute doesn’t take that risk either.

There is no limitation to the Secretary’s theory in this case.

The Secretary’s theory means that we come, the contractors come, after the allocation of the Secretary.

Well, the Secretary could, in a reduction year, decide to allocate the entire reduction to the contracts and enhance even his own Federal bureaucracy and programs serving other tribes and say, now I’ve made my decision and I’ve made my judgment.

I don’t have enough money to pay you.

There’s no limit here on contract support costs.

It could be the secretarial amount.

They could zero out these contracts and say it’s practical availability.

And we’ve decided there isn’t enough money to deal with all of the health care needs in the country, so we’re going to deal with the ones we operate and you come last.

Now, that’s not what the… that’s not what the statute permits.

That sort of interpretation would lead to an absurdity.

With regard to the Tenth Circuit decision, Justice, you asked a question about the declarations in the Tenth Circuit.

There was a declaration in the Tenth Circuit, but all it had was a conclusory statement, to have reprogrammed anything would have caused reductions in programs serving other tribes.

Now, that is not sufficient proof to withstand summary judgment, and it’s certainly not sufficient proof to establish summary judgment.

So for all these reasons, we believe the Tenth Circuit decision should be reversed and the Federal Circuit decision affirmed.

Unless the Court has more questions.

John Paul Stevens:

Thank you, Mr. Miller.

Lloyd B. Miller:

Thank you, Justice Stevens.